* Fiscal Deficit is the difference between the total income of the government (total taxes and non-debt capital receipts) and its total expenditure.
* A fiscal deficit situation occurs when the government’s expenditure exceeds its income. This difference is calculated both in absolute terms and also as a percentage of the Gross Domestic Product (GDP) of the country.
* A recurring high fiscal deficit means that the government has been spending beyond its means.
# Causes of Fiscal Deficit
Sometimes, the governments spend on handouts and other assistance to the weak and vulnerable sections of the society such as the farmers and the poor.
* A high fiscal deficit can also be good for the economy if the money spent goes into the creation of productive assets like highways, roads, ports and airports that boost economic growth and result in job creation.
# How is Fiscal Deficit met?
* The government meets fiscal deficit by borrowing money. In a way, the total borrowing requirements of the government in a financial year is equal to the fiscal deficit in that year.
# Budget 2020-21
* The government raised fiscal deficit target to 3.8 per cent of the GDP from 3.3 per cent pegged earlier for 2019-20 due to revenueshortage. This estimation is consistent withGovernment’s abiding commitment to macroeconomic stability,” Finance Minister Nirmala Sitharaman said while presenting Budget 2020-21.